Chestertons Monthly Property Markets Review - October 2014
The economy has started the year in better shape than anticipated – however, if the corona virus continues to spread the negative impact already seen in global stock markets could spread to the wider economy – especially as China is such an important source of materials/finished goods for many sectors of the wider economy. Meanwhile, inflation is drifting upwards, although the consensus view from economists is still that the next Bank Rate movement is more likely to be down rather up.
The boost given to the sales market by the Election result has gathered momentum and is especially apparent in the prime locations in London. Buyers are more confident and although more vendors are marketing their properties (Rightmove reported a year-on-year rise in new listings for the first time in 13 months nationally and for the first time since October 2018 in London) the supply of available stock is not keeping pace with demand. Consequently, offers on properties are coming in at closer to asking price – and on some properties, we are seeing multiple offers, in some cases exceeding achieved prices.
Latest data from the Land Registry show that price growth is accelerating – in London reaching the highest annual rate since October 2017. Price growth remains strongest in the less central boroughs, although the data refers to December and it is likely that central London boroughs will have seen prices stabilising – or even slightly rising – so far this year.
Rents continue to rise against a backcloth of steady tenant demand and reducing supply as more accidental/part-time landlords retreat from the market in the face of an increasing tax and regulatory burden. For professional buy-to-let (BTL) investors, however, there are good opportunities: for example, in London yields have risen over the past 12 months and values are looking as if they are bottoming and there is strong tenant demand. After a quiet year in 2019, this year may see more BTL investors adding to their portfolios.
The large-scale investor end of the market, especially from overseas players, continues to expand: the build-to-rent stock increased by 51% in 2019 and the early evidence so far this year suggests that there are plenty of investors looking to target this sector both in London and in the major regional centres. There is still appetite for forward funding although completed stock that can deliver income more immediately is the preferred option.